Disney is facing pressure from activist investor Daniel Loeb, founder of hedge fund Third Point14 Oct 2020 01:18
Published 13th October 2020. BreakingViews.
A premium video-on-demand model like the one Disney used for "Mulan" will not work for a studio’s biggest, most ambitious films, LightShed Partners analyst Rich Greenfield said in September, noting that a $2 billion box-office film can generate over $800 million in profit to a studio.
Disney is facing pressure from activist investor Daniel Loeb, founder of hedge fund Third Point, to increase funding to Disney+ and the rest of its streaming businesses.
While Loeb applauded Disney's restructuring on Monday, a person familiar with the hedge fund's thinking said Third Point is urging Disney to take more feature films directly to streaming platforms, or to put them in theaters and on Disney+ on the same day.
Disney, the company behind blockbuster movie franchises including "Avengers" and "Star Wars," said it was committed to theaters when it announced the restructuring. The changes separate creative divisions from the distribution unit that will send programming to cinemas, streaming or other platforms, though Disney said they work in "close collaboration." Chief Executive Bob Chapek, speaking to CNBC television, described the shift as "tilting the scale pretty dramatically" toward streaming.
Theater chain AMC Entertainment Holdings Inc said on Tuesday it would run out of cash as early as the end of this year if conditions did not improve.
"Wonder Woman" director Patty Jenkins is among dozens of top Hollywood names urging U.S. Congress to provide financial aid to help cinemas weather pandemic shutdowns.
"While we remain confident that streaming economics in totality are far superior long-term than traditional movie/TV economics ... nothing can achieve the per-picture economics that Disney is able to generate through a global theatrical release," Greenfield wrote on Tuesday.
That "makes it very hard economically for Disney to pivot away from" current movie windows in theaters, he said.
Releasing more films that were meant for theaters directly to streaming "would be a material step down in content revenues from the level generated by their current business structure, but likely even a greater drop in profits," MoffettNathanson analyst Michael Nathanson wrote on Oct. 1.
Chapek hinted during a CNBC interview on Monday that changes to its theatrical model could be coming. He said details would be unveiled at an investor presentation on December 10.
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https://www.nasdaq.com/articles/analysis-fewer-movies-in-theaters-big-media-turns-focus-to-streaming-video-2020-10-13